Questions regarding Credit Score and Credit Cards

[Suss&Camm 2,213]

11 hours ago, Hopeful diva said:

Does paying utilities and rent on time help to build credit? Or is credit building solely tied down to acquiring credit cards and loans? 

Also, if I paid off my credit card debt assuming I'm at a very low balance now/utilized 75% of my credit line, within how many days or weeks would it take for me to see a rise in my credit score? 

You should keep your utilization between 10-20%. Most creditors report monthly, some more often, so the time until effect will vary. It's also about paying it off regularly not just once. Your best bet is to pay in full each billing cycle to improve your score quickly.

Edited June 26, 2017 by Suss&Camm

[Hopeful diva 99]

43 minutes ago, Suss&Camm said:

You should keep your utilization between 10-20%. Most creditors report monthly, some more often, so the time until effect will vary. It's also about paying it off regularly not just once. Your best bet is to pay in full each billing cycle to improve your score quickly.

Can I make payments more than once in one cycle?

[Balamban 113]

I agree with Suss&Camm, 10-20% is perfect, neither too low (0% has a negative effect) nor too high, above 20%, and more so above 30% hurts the score.

 

Prior to last year utilities and rent had no effect UNLESS they turned an unpaid bill over to collections in which case, if the bill collector reports to one or all of the big three, your score will plummet.

 

" Payment history with cable, cellphone, electric and gas bills generally aren't reported to credit bureaus and aren't traditionally used in credit scoring models, but they are the basis for the new FICO score."

 

The "new" FICO score will be the score that, for instance, determines is you are offered 7.99% versus 14.99% or 19.99% on a credit card.  The "new" FICO score will also be the one that automobile and house insurance companies will use in determining how much you will pay.  It is not uncommon for a person with a ~690 score to pay a few hundred dollars more each year than a person with a ~790 FICO.  It this age of electronic surveillance it is becoming more and more important to have a perfect record, though you may never know how much a lower score can hurt you.  Last year my house insurance rose tremendously, I squawked and threatened to find another agent.  A week later my bill was reduced from $1600 to about ~$1400 because "of an excellent credit score."  Thus even my local insurance agent utilized my FICO score, she found that the insurance company had a discount for a high credit score, and so in that case, I scored.

 

Rent generally has no effect unless, (as a current ex-tenant of mine is about to find out) the unpaid bill is turned over to a bill collector AND a small claims action is started.  A court case against you hurts big time, in the credit world you are guilty, period.  Even proving that you are not guilty will not do anything to recover the drop that the litigation creates.

 

I have a bill that I paid late last year, a very unfair bill, in my opinion.  I was hospitalized last year for 5 days.  A nice fellow came by chatted a bit, and oddly asked me: "Do you think you need a short stay in a rehab hospital."  I was confused and laughed commenting, "I just hurt my back, I didn't have a stroke, so no."  Later I learned why the fellow stopped for about 5 minutes: $375 bill for "psych services."  In my opinion this fellow is a predator who judged me based upon my looks.  I was unable to stand for more than a minute for 5 days prior to going to hospital and so could not shave.  But I have paid the bill because otherwise it would hurt me.  Each month I write him asking for doctor's notes, the reason why there is a charge and asking for medical records allowed by HIPAA, each month he ignores my hand written letters.  Shortly I will pay $40 and start a small claims action.  If he even shows up I'll bet that he'll state "I never received any notes."  But surprise, surprise, instead of sending them certified, or by traceable mail, they appeared untraceable but if he utilizes that very common method of denial, at that point I will give the bailiff the three "certificates of mailing," and I will prevail.  So I pay even wrong or unfair bills, and sort them out later, my FICO is just too important.

 

HopefulDiva yes, you can make more than one payment each month and I've read that paying bi-monthly increases your score.  Again, the "machine" wants consistency.  To pay an extra payment occasionally may be a bit helpful but to pay twice a month consistently is actually much better.  It shows that you are on top of things.

Edited June 26, 2017 by Balamban
To answer Hopeful Diva's question which just popped up.

[ddtenor2 80]

In 2106, after we were married, I called Capital One and asked to have my husband added as a joint credit card account holder.  The customer service representative told me she could not do that, but I could add him as an authorized user, and doing this would enable him to build his own credit score.  He did need a SSN so his activity could be reported to the credit reporting agencies.  Sure enough, within 3 months of adding him to my account he started getting offers from other credit card companies.  If I remember correctly, Capital One, CitiBank, Chase, and (surprisingly) American Express all sent pre-approved applications.  He applied for and received his own credit card from Capital One.  It was not a secured credit card, but it also wasn't associated with any rewards program.  A couple of months after receiving his card he called Capital One and asked to have the card switched to a Quicksilver account, so now he is earning cashback rewards as well as continuing to build his own credit score.

[Dutchster 1,107]

Funny, my husband and I had a discussion about this the other night since I want to start building credit, too (plus, my work is about 50 min from home so having a cc on hand if I need to get gas all of the sudden and the debit is running low or flat tire.. always easy). We have been looking around and it looks like starting with a secured credit card was the best option at first but the more I was looking into it, the more I saw how horrible the interest rates are. My husband has a credit card via First Tennessee and he had to be at the bank last week. The woman who always helps us told him now that I have a job, I could become an authorized user but I read mixed reviews because most banks only allow a credit card if you have a credit score. 

Edited June 26, 2017 by Dutchster

[Suss&Camm 2,213]

10 hours ago, Dutchster said:

Funny, my husband and I had a discussion about this the other night since I want to start building credit, too (plus, my work is about 50 min from home so having a cc on hand if I need to get gas all of the sudden and the debit is running low or flat tire.. always easy). We have been looking around and it looks like starting with a secured credit card was the best option at first but the more I was looking into it, the more I saw how horrible the interest rates are. My husband has a credit card via First Tennessee and he had to be at the bank last week. The woman who always helps us told him now that I have a job, I could become an authorized user but I read mixed reviews because most banks only allow a credit card if you have a credit score. 

If you pay in full each month after closing (within 30 days) you don't pay any interest. Since paying in full is recommended for building credit the interest rate was nothing I looked at.

[Hopeful diva 99]

One more question guys... I'm completely naive in regards to anything concerning credit but glad this topic came up because it has been helpful. 

Planning to buy a car next year. How does my credit score help? Will it help me get a better monthly payment or interest rate? Or does my score not matter when these are factored in?

i however know that if you have a bad credit score, you cannot purchase a car , house or anything  tangible 

 

 

[Suss&Camm 2,213]

Just now, Hopeful diva said:

One more question guys... I'm completely naive in regards to anything concerning credit but glad this topic came up because it has been helpful. 

Planning to buy a car next year. How does my credit score help? Will it help me get a better monthly payment or interest rate? Or does my score not matter when these are factored in?

i however know that if you have a bad credit score, you cannot purchase a car , house or anything  tangible 

 

 

They will run your credit and it will help determine

1. If you are eligible for a loan

2. If you prove eligible, what interest rate you'll get. 

 

Also - you can buy a car with bad credit - with cash

 

 

 

[Suss&Camm 2,213]

Also, a higher down payment will give you better monthly payments cause the amount left to pay, split up over the same amount of months (as with a lower down payment) will be less each month. Having a good down payment also shows that you are good for some money and can further help in negotiate a better interest rate.

[ch3john 308]

22 hours ago, Suss&Camm said:

Also, a higher down payment will give you better monthly payments cause the amount left to pay, split up over the same amount of months (as with a lower down payment) will be less each month. Having a good down payment also shows that you are good for some money and can further help in negotiate a better interest rate.

"with cash" - probably the best advice on this topic.